What’s next for marijuana in Massachusetts?

Wednesday

The indoor growing is beneficial because it allows Corner Stalk to grow year-round. But farming is still a tough business with tight profit margins, so Cooney is looking to add a new crop -- cannabis.

“We decided the best way for us to ensure our sustainability was to add cannabis as one of our crops,” Cooney said.

The East Boston farmer is one of hundreds in the Massachusetts business community champing at the bit to capitalize on the much-anticipated, adult-use marijuana market.

The excitement is fueled by marijuana business consultants, who estimate the cannabis industry could ultimately reach $1.8 billion in Massachusetts.

How long it takes to achieve such value, however, isn’t clear, as the nascent industry continues to stand itself up. Nonetheless, it’s likely many marijuana-related startups will open and shutter along the way, according to Rob Hunt, founder of Shingle Hill, a cannabis consultancy group based in California.

“There are going to be a lot of people who make a ton of money in this industry, but that’s going to be very unlikely for the vast majority of people,” Hunt said. “I’m a huge advocate, but I think there are cautionary tales.”

On June 20, Hunt and Cooney spoke in Boston at the Massachusetts’ Expanding Cannabis Economy forum, hosted by the State House News Service and the Massachusetts Cannabis Business Association, a recently formed trade group.

Hunt’s cautionary tale is known as “overproduction,” an economic dynamic playing out in other states where adult-use marijuana, also known as recreational marijuana, is legal.

When marijuana- and other cannabis-related products become available to the general public, demand soars and business booms, he explained. The early success of sellers, growers and manufacturers, paired with an overall excitement to make money in a potentially lucrative market, inspires others to join.

The influx ultimately results in supply exceeding demand, and overproduction drives down sales and then profits. Ultimately, a boom and bust cycle ensues and businesses shutter as the market corrects itself. Hunt said a similar issue is already playing out in California.

“Before the bust, there will be a decent boom, but there will be a bust,” Hunt said.

Tim Keogh, president and CEO of AmeriCann Inc., estimates the Massachusetts cannabis market will nonetheless demand a major infrastructure buildout. He’s banking on it, too, as AmeriCann has purchased 52 acres in Freetown and plans to develop nearly 1 million square feet of greenhouse space for cultivation and processing.

“Large-scale cannabis cultivation really made sense to me in terms of cost,” he said. “It’s about starting small and expanding based on demand.”

July 1 was supposed to represent a long-awaited start date for commercial sales, but advocates will have to wait much longer before the Massachusetts cannabis market will require 1 million square feet of cultivation.

Licensing alone is taking time, as the Massachusetts Cannabis Control Commission, a regulatory body with licensing authority, approved the state’s first-ever cannabis business license on June 21, just a week and a half shy of what had been projected as the July 1 start date.

However, State House News Service on June 26 reported the state still hadn't approved a license for an independent testing laboratory, meaning retail marijuana sales would not be available at all on July 1.

Sira Naturals, which was awarded the first license, is also a cultivator. The Milford-based business will need to sell to a retailer for its products to be available for consumers.

Cooney, who has applied for a cultivator license, said the process requires a lot of time and paperwork, which can be tough if you don’t have a business background or means to pay a lawyer. Some entrepreneurs are running into challenges in preparing the necessary requirements.

“The biggest challenges I’m hearing is related to financing, local approval, getting a location and getting a bank,” said Shaleen Title, a CCC commissioner.

Others, including Jordan Jackson, are in the process of developing their business models, and waiting to see how the licensing process works out before submitting an application. Jackson is CEO of Stash Dash, an on-demand marijuana delivery startup.

“We’re making a play on convenience and hoping to help craft cultivators expand sales to places outside of their immediate markets,” Jackson said.

As of June 14, the CCC was reviewing 53 completed license applications, including 18 cultivators, 17 retailers, 12 manufacturers, three research facilities, two microbusinesses and one transporter. The greatest number of licenses, 16, were being considered for Worcester County. Five were counted in each Bristol, Franklin, Middlesex, Norfolk and Plymouth counties.

July 1 was mostly symbolic, but nonetheless special to many who have waited a long time for the adult-use industry to get started. And Shawn Collins, CCC executive director, is bullish about where it’s heading.

“How this industry looks in five, 10, 20 years from now, nobody seems to know, and I’d be really reluctant to guess,” he said. “But I’m confident that if it exists here in Massachusetts … I’m very optimistic.”

Eli Sherman is an investigative and in-depth reporter at Wicked Local and GateHouse Media. Email him at esherman@wickedlocal.com, or follow him on Twitter @Eli_Sherman.

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